Edina-based haircare company Regis is selling the remainder of its company-owned salons to franchisees.
The decision was announced on Tuesday as the company reported its 4th quarter and full-year operating results, with the remaining 3,108 salons still owned by the corporation soon to shift into the hands of franchisees.
The company had already sold 764 of its 7,145 total salons to franchisees this year, and noted that its company-owned salons had seen a 4.3 percent reduction in revenue this year.
"Given the success to date of the Company's effort to profitably sell and convert company-owned salons into its franchise portfolio, the Company has reached the decision to fully franchise its remaining company-owned portfolio of salons," the company said in a press release.
It contends that the move will result in a bigger return on the company's capital, result in a simpler business model that provides a "platform for sustainable organic growth," and put responsibility for the salons into the hands of owners who can offered a "more localized service experience."
The change will also allow Regis to cut the number of other salon brands it has from more than 50 currently to just five: Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters, and Roosters.
Hugh Sawyer, Regis CEO, said: "After more than two years of carefully planned evolution we have identified and confirmed a compelling vision for Regis as a capital light, high growth, technology enabled franchise company.
"Although the transition to a capital light franchise model will initially have a dilutive impact ... we are convinced that a fully franchised business that generates a higher return on its capital will prove to be in the best long-term interests of our shareholders."
Regis says it'll take 18-24 months for the transition to completely franchisee-owned salons to be completed.